Tamar partners in $700m supply contract with Paz

Natural gas from the Tamar field will fuel Paz's oil refinery in Ashdod.

The Tamar partners - Noble Energy Inc. (NYSE: NBL), Delek Group Ltd. (TASE: DLEKG), Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L), and Alon Natural Gas Exploration Ltd. (TASE: ALGS) - have signed a $700 million natural gas supply contract with Paz Oil Company Ltd. (TASE:PZOL). The partners will supply up to 3.12 billion cubic meters of gas to Paz over 15 years.

Paz will use the gas for the cogeneration power station at its oil refinery in Ashdod, as well as for a second cogeneration power station, which is under construction and due to come online later this year.

Paz will pay under a take or pay mechanism for the purchase of a minimum quantity of gas per year. The contract includes a compensation mechanism in the event of a shortfall in deliveries, a warranty cap, arbitration mechanism and other standard terms.

Noble Energy owns 36% of Tamar, Delek Group subsidiaries Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L) each own 15.625%, Isramco owns 28.7%, and Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL) unit Alon Natural Gas Exploration owns 4%.

The Paz contract is just the latest contract for Tamar, including a $15 billion contract with Israel Electric Corporation (IEC) (TASE: ELEC.B22), and contracts worth several billion dollars altogether with private power producers.

Delek Group's share price rose 1.9% by mid-afternoon today to NIS 735.60, giving a market cap of NIS 8.3 billion, Avner's share price was flat at NIS 2.54, giving a market cap of NIS 8.5 billion, Delek Drilling's share price rose 0.4% to NIS 14.19, giving a market cap of NIS 7.7 billion, Isramco's share price fell 0.6% to NIS 0.52, giving a market cap of NIS 6.3 billion, and Alon Natural Gas's share price fell 3.1% to NIS 38.61, giving a market cap of NIS 540 million. Paz's share price rose 0.3% to NIS 497.50, giving a market cap of NIS 5 billion.

Published by Globes [online], Israel business news - www.globes-online.com - on April 2, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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